Italy's ENEL, Echelon Team on Home Networking

ROME (05/10/2000) - Laying claim to making a major step toward the creation of the networked "intelligent" home, Italy's ENEL SpA, the world's largest publicly traded electric utility, and Echelon Corp., a U.S. company specializing in the networking of domestic devices, have agreed to integrate their technologies in a wide-ranging networking project.

The agreement may result in technology that integrates Sun Microsystems Inc.'s Java technology, since Echelon has a preliminary agreement with Sun to incorporate Java and Java-related technology into its products.

The two companies have signed a non-binding memorandum of understanding, under which ENEL will integrate Echelon's Lonworks system into its digital meter project, the companies announced today. "ENEL will provide digital electricity meters and a complete home networking infrastructure to over 27 million Italian households over a three year period," the companies said in a joint statement.

The agreement will help provide the largest network infrastructure in the world for networking everyday devices, Echelon Chairman and Chief Executive Officer M. Kenneth Oshman said in a prepared statement.

ENEL CEO Franco Tato also welcomed the agreement, saying it will help his company to cut costs and improve the quality of its service. "We are planning to add intelligence to the power grid. It is an important strategic initiative for ENEL," Tato said in the statement. ENEL serves in excess of 29 million customers and had revenue last year of approximately US$20 billion.

The companies expect to reach a definitive agreement in June and to begin installing systems in the first quarter of 2001, the statement said. The system will eventually give customers the opportunity of remotely controlling their domestic appliances via fixed or mobile telephony or via Internet. The ENEL Group, which has a 51 percent stake in Italy's Wind SpA telecommunications carrier, will manage the relevant telecom infrastructure, the company said.

Echelon will support ENEL in providing a home networking infrastructure, including devices to enable communication over existing power lines and Echelon's PLT-22 power line transceiver, data concentrators at each utility substation, LNS network operating system software and gateways to enable communication to indoor devices, the statement said.

It is too early to say whether Sun Microsystems' Jini network technology will be used in the system, an Echelon spokeswoman said. "It depends on whether it turns out to be a good fit for this type of application. That will become clear as the specifications are worked out," said spokeswoman Lyn Balistreri. "We are still developing the specifications, with the aim of making the system as efficient, low cost and robust as possible."

On May 4, Echelon and Sun Microsystems announced a memorandum of understanding to integrate Lonworks networks with Java technology-based services for set-top boxes and gateway devices. The integration of Lonworks networking services with Sun's Java Embedded Server (JES) software has potential remote energy management applications, the companies said at the time.

Under today's proposed agreement, ENEL will purchase 3 million shares of newly issued Echelon common stock, equivalent to 9 percent of the Palo Alto, California-based company's total equity, an ENEL spokeswoman said. "Financial details of the operation will be announced in June," she said.

ENEL can be contacted in Rome at +3906-8509-7652 or on the World Wide Web at http://www.enel.it. Echelon can be contacted in Palo Alto, California at +1-650-855-7402 or on the Web at http://www.echelon.com.

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